SK Telecom, South Korea's largest wireless carrier, is making a major push into the artificial intelligence infrastructure business. The company announced plans to build a network of AI data centers across the Yeongnam region, starting with a 100-megawatt hyperscale facility in the industrial city of Ulsan.
The carrier's ultimate target is 5 gigawatts of total capacity by 2029. For context, a gigawatt is 1,000 megawatts, so this represents a fiftyfold expansion from the initial site. The move positions SK Telecom alongside a growing list of telecom and technology companies investing heavily in the physical infrastructure needed to power AI applications.
Why Telecom Companies Are Building Data Centers
Telecom carriers have long owned land, fiber networks, and power infrastructure—assets that are increasingly valuable for data center development. AI workloads require enormous amounts of computing power and electricity, and data center operators are scrambling to secure both.
SK Telecom's existing network assets and real estate holdings give it a natural advantage in site selection and connectivity. The company is following a playbook similar to that of other carriers globally, which are repurposing their infrastructure for the AI boom. For example, Deutz is targeting €1 billion in energy revenue as AI data centers boost demand for backup power systems.
The hyperscale data center market is growing rapidly, driven by cloud computing and generative AI. Hyperscale facilities are massive facilities designed to support thousands of servers and high-density computing. They typically consume 100 megawatts or more of electricity—enough to power tens of thousands of homes.
The Ulsan Site and Regional Expansion
SK Telecom's first site in Ulsan will be a 100-megawatt hyperscale facility. Ulsan is a major industrial city on the southeastern coast of South Korea, known for its petrochemical and automotive manufacturing. The city's existing power grid and industrial infrastructure make it a practical location for a large data center.
From there, the company plans to expand across the broader Yeongnam region, which encompasses the southeastern part of the Korean peninsula, including the cities of Busan and Daegu. The 5-gigawatt target by 2029 suggests an aggressive buildout timeline, with multiple facilities coming online over the next five years.
This is not the first large-scale data center project in the region. Aecon recently won a C$4 billion contract to build a gas plant in Alberta designed to power data centers, highlighting the global race to secure energy for AI infrastructure.
What It Means for Investors
For everyday investors, SK Telecom's announcement is a reminder that the AI boom is not just about chipmakers like Nvidia or software companies like Microsoft. The physical infrastructure—data centers, power grids, cooling systems, and networking equipment—is a massive and growing market in its own right.
Telecom companies are increasingly seen as potential beneficiaries of this trend. Their existing assets, including land, fiber, and power connections, give them a head start in data center development. However, building hyperscale facilities is capital-intensive and carries execution risk. Investors should watch for updates on financing, construction timelines, and customer commitments.
The broader data center industry is attracting significant investment. Crusoe Energy is reportedly in talks to raise $3 billion for AI data centers, with a potential valuation of $30 billion. Meanwhile, BDx Data Centers is exploring an IPO to fund its own expansion in Asia.
For SK Telecom specifically, the data center buildout represents a strategic shift. The company's core wireless business faces mature growth in South Korea, where mobile penetration is near saturation. Diversifying into AI infrastructure could open new revenue streams and improve long-term growth prospects.
That said, the 5-gigawatt target is ambitious. Achieving it will require significant capital, regulatory approvals, and partnerships with energy providers. Investors should monitor the company's quarterly earnings calls for updates on progress and any changes to the plan.
In the near term, the announcement is likely to generate interest in SK Telecom's stock and in the broader theme of telecom companies as AI infrastructure plays. But as with any large-scale capital project, the payoff will take years to materialize.
